Why Some Estate Plans Fail (and How to Make Sure Yours Doesn’t)
Have you heard? Forbes said that the vast majority of estate plans fail. And while we think their numbers are probably a bit inflated (70%?!), we understand that often estate plans do not do what the people who created them want them to do. This isn’t good for anyone! So today, we’ll take a look at why estate plans fail and how to avoid these failures!
Common Estate Planning Myths
Many people think that having any estate plan is better than having none at all. We are here to tell you that just isn’t true!
The state has very clear rules for what happens when someone dies without an estate plan in place. It’s a long and painful process, but the roadmap is clear. Things will take longer and be harder, but there is little confusion about the rules.
But when there is a Will in place that is unclear or ineffective, there are a lot more layers to wander through. Sometimes fights break out between family members—even family members who are on the same page– because of missing punctuation! Unnecessary legal jargon that is hard to follow isn’t helpful. It’s a hindrance.
Clarity is key. This is why it’s crucial to partner with a highly competent professional to help you make sure your estate plan is fail-proof. A great estate planning attorney, like my firm, can help you clearly outline your wishes in language that is easy to understand. They can also help you have conversations with your loved ones so they know what to do at the time of your death.
Reasons for Failure
One of the first reasons why estate plans fail is that they are outdated. It’s true that estate plans don’t expire, but the longer an estate plan goes untouched, the more likely it is to become ineffective. For instance, estate plans where the testator (the person who created it) outlives every person named in it. At this point, the estate plan really isn’t worth the paper it’s printed on. Any living heirs have to go to court to be named as the executor or a beneficiary. It becomes as long and drawn out a process as if that testator had died without any plan in place.
Another reason for failure is that the testator created an estate plan in one state, moved, and never created a plan in their new state of residence. Many states will honor a Will from another state, but it’s important to ensure that your Will is valid and will be honored. Updating the whole plan is the best way to ensure that your plan is valid.
Or perhaps a Trust is being utilized, but certain properties don’t get into the Trust. This happens most often because the property is improperly titled or deeded. This could be easily avoided if you are vigilant about reviewing your estate plan regularly.
Lastly, this is for all of you DIYers out there: each state has very specific rules and requirements for Will or Trust to be valid. If you don’t meet every requirement, you guessed it! The estate plan will fail. This is why DIYing your estate plan is always a terrible idea. We don’t say that because we don’t want you to save money. We say that because more times than not, DIY estate plans fail and cost the estate lots more than paying an attorney to do it right the first time.
Real Life Implications of a Failed Estate Plan
So, what’s so bad about an estate plan that doesn’t work?
In some cases, everything will still go exactly the way you want it to— it’ll just take 2-3 times longer. This is the absolute best case scenario.
In other cases, things go awry. Sometimes, beneficiaries you wish to provide for don’t get anything at all. For instance, say your desire was to provide equally for your significant other, who you are not married to, your biological children, and your significant other’s child, whom you have raised since they were 2 years old. You die. Your estate plan isn’t valid because you DIY’d it and you missed some state requirements. In the eyes of the court, your DIY estate plan means absolutely nothing. So, they probate your estate as if you died without a plan in place. And since your significant other and their child are not legal heirs, they get nothing.
This is a very real scenario that plays out repeatedly in our state and country. You may think that these laws are in place arbitrarily or that the court is out to get you. But it’s not. The laws are designed to protect you and your children. But sometimes these laws don’t protect the people you love the most.
How to Create a Fail-Proof Estate Plan
The first step in creating an estate plan that doesn’t fail is to build it out with a skilled professional. Our office only does estate planning because we want laser focus. It’s important to partner with a firm that knows its stuff. You don’t want an attorney who does it all. You want someone who really knows estate planning to help you create a bulletproof plan!
After you’ve created your incredible and solid estate plan you get to celebrate, take a bow, throw a party, and feel good about yourself. But that’s not the end! You need to review your plan regularly. If any life changes occur (births, deaths, marriage, divorce, major property purchases, changes in wealth), you call your skilled professional, fill them in, and then make any necessary changes! And you do this every one to three years—and most years there won’t be any major changes, so you won’t need to make updates!
Lastly, you need to have a plan in place for your family to follow when you die. You may be thinking, well, isn’t that what my estate plan is for? Yes. But also no. Your estate plan tells them who gets what and when. But it doesn’t tell them how to administer the estate. So it’s a good idea to have a full plan in place. For instance, putting together a binder with all the information they will need is very helpful. Some clients prepay for funeral services, so put that info in the binder. Put the name and contact information of your attorney in the binder so they can begin any necessary court proceedings. Having everything clearly organized in a place where your loved ones know to look makes the whole process easier for them! Our office creates an easy-to-understand one-sheet of everything you and your loved ones need to know. We do this because no one should have to read an entire multi-page document to know what is happening. You and your loved ones deserve a clear, everyday English summary!
Your estate plan doesn’t have to be one of the ones that fail! Partnering with my team to create and maintain a solid plan can prevent that outcome. Call us at (404) 736-6066 or visit our website to schedule a consultation for a fail proof estate plan!
